The Control Your Cash 2012 Woman of the Year

January 2, 2013

(Not pictured: CYC Woman of the Year commemorative sash and scepter)

Every year we honor someone who embodies the Control Your Cash spirit, and name that person our Man of the Year. To win, all you have to do is buy assets, sell liabilities; and most importantly, act as the primary determinant of where your money goes instead of complaining about how the world is stacked in somebody else’s favor. That describes fewer people than you’d think, despite our best efforts to change the world’s collective mindset. Previous Control Your Cash Men of the Year have included a presidential candidate, a guy whom we never met yet who managed to lead an interesting and productive life despite making little money, and a CYC acquaintance who refuses to spend money stupidly and take on unnecessary expenses.

With 2012 in the bag, we’re proud to announce that its honoree is our first Woman of the Year. And a personal finance blogger, although that’s just a coincidence.

It’s Paula Pant, who runs Afford Anything and whose attitude and acumen we’ve espoused multiple times on this site. More to the point, she’s a real estate investor whose cash is flowing at a large enough volume that a significant chunk of her income now derives from investments. Investments of her own creation, no less.

Standard, incorrect thinking maintains that anyone who succeeds in this rapacious capitalist society of ours either a) came from money or b) killed herself by working 17-hour days and never coming up for air. The first is at best a sufficient condition, not a necessary one. The second is a sucker’s game, which you instinctively know, whether you choose to acknowledge it or not.

Ms. Pant didn’t start off with gigantic privileges. She’s a 1st-generation American who grew up in a stable household of ordinary means, neither summering in the Hamptons nor panhandling for sustenance.

She didn’t even study corporate finance in college, nor neurosurgery, nor something else with a promise of immediate financial rewards upon graduation. Nor did she go to an Ivy League or other exclusive private college. She majored in sociology (of all things), at the University of Colorado. A school where most people major in weed, if you give credence to stereotypes.

We don’t know what kind of salary Paula draws, but she’s a freelance writer. Her direct income is probably closer to modest than it is to exorbitant. Yet she owns 3 rental properties, travels the world like she’s being chased by Interpol, and is still on the innocent side of 30. How is this possible, when the typical 20-something journalism graduate is

drowning in tens of thousands of dollars of student loans

often working retail, given the dubious long-term prospects for the business model of newspapers and magazines?

Short answer, Paula is a hopelessly original thinker. As proof of this, she wrote a post titled “If I Had $1 Million, I’d Go Into Debt” and wasn’t kidding. Most people are too dumb to draw a distinction between consumer debt (that monstrous VISA bill that you try to wish away the existence of) and smart leverage (borrowing money at x% so you can earn a return of x+y%, which is the only legitimate and lasting way for most of us to build wealth.) Paula is the exception.

She bought one of those houses at an 80% discount (not a typo). The house cost less than a new Ford F-150 without options, and while the house needed some cosmetic work, the effort she put into said work (her sweat, her contractor boyfriend’s sweat, the money she paid to some professionals) paid for itself several times over. And continues to, as her tenants are making her rich(er).

Last January, Ms. Pant announced that she was somewhat improbably going to invest every single penny she made in 2012. This wasn’t some character-building exercise, nor a New Year’s Resolution. It was a way to focus the “pain” of forgoing immediate luxuries in order to enjoy further and more pronounced pleasures. (Pleasures in the form of greater rental income, and ultimately greater self-determination. It also meant a year of deferring world travel, her passion.)

Wait, you mean you can invest your money obsessively and still enjoy life? Come on.

YES. What shameless self-promoter Tim Ferriss argues you can do in theory, Paula does in practice. And it doesn’t involve weighing your food to the nearest milligram, nor paying money up front to a fulfillment company and hoping for the best, nor hiring an Indian remote assistant to proofread your documents (which will invariably require another round of proofreading upon their return.)

Her priorities are specific, with flexible but detailed plans on how to get there. Contrast that with the directionlessness that most people exist under.

I hope I get a raise this quarter.I really should ask for a raise.Should I apply for another job? What if I don’t get it, then word gets around that I’m looking? Oh, I’ll be so screwed.If I stay, they’ll match my 401(k). I couldn’t leave if I wanted to.My landlady raised the rent again. So unfair.

Look: most transactions in our society are mutually beneficial. Otherwise, they wouldn’t happen. For instance, no one likes paying rent, but it beats living under a bridge or with your parents. But fortunately (fortunately for the landed gentry, that is), there are plenty of people undisciplined enough that their very existence enriches the people who own things. And by “things”, we don’t necessarily mean high-rise apartment buildings or Class A shares of Berkshire Hathaway stock. A few single-detached rental properties in Atlanta will do.

Furthermore, it’s so easy to get to get to this position. All it takes is a tiny bit of motivation and again, discipline. Paula could have squandered paycheck after paycheck on unnecessarily expensive vacations and vehicles. Instead she travels largely on the cheap, sees no economic potential in $3000 leather car seats, and invests all the cash she has available. Not every investment turns to gold, of course, but it’s not that hard to minimize the potential risk. And as the saying goes, you miss 100% of the shots you don’t take.

When we talk about Paula’s modest background and stress that anyone with a brain can do what she’s done, we don’t mean to denigrate her nor her accomplishments. Far from it. Actually deciding to follow through on a plan, like Paula has done, is surprisingly difficult for many people to do. Most people, in fact. Better to lament one’s station in life than say, “I can do this, and will figure out how.” Paula Pant can, and did, and does. Leverage your assets into higher-valued ones, carry intelligent debt rather than stupid debt, and generate positive cash flow, and you could be a finalist for our 2013 Woman (or Man) of the Year.

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